Telkom telly
However – apart from first obtaining a licence – its success will depend on the number and clout of other new competitors (there are 17 other hopefuls) and its ability to secure and produce attractive content.
Demonstrating the trial of its IPTV (TV over broadband, more commonly known as cable) offering, the recently formed Telkom Media detailed plans to spend up to R7,5bn over 10 years in rolling out satellite and cable TV to mostly middle income South Africans.
Rikus Matthyser, Telkom Media’s chief strategy and operations officer, says it’s budgeting to sign up at least 400 000 subscribers within 10 years, but he’s confident that target is conservative.
Before Vodacom and MTN launched in early 1994, analysts predicted SA’s cellphone industry would sign up around 500 000 subscribers over 10 years. Anyone predicating cellphone penetration of 70% to 80% 13 years down the line would have been dismissed as a lunatic.
It isn’t a fair comparison, given that the former represents the overwhelming need to communicate – a stimulant to empowering people and growing the economy – while, apart from use for educational purposes, TV is essentially a luxury. But as cellphones are considered to have democratised communication, Telkom Media is likewise talking about making subscription TV available to a much larger percentage of SA’s population than currently by bringing the satellite subscription price to below R100/month.
The company says 75% of households in SA have a TV set but only 11% of TV-owning households have pay-TV.
Telkom Media says its offering would be tiered, with the upper end an interactive cable offering – for which Telkom first needs to finish rolling out its next generation network – coming it at around R320/month, which is less than incumbent MultiChoice’s existing satellite bouquet DStv.
However, as with the regulatory stalling that saw competitor Neotel only being launched years later than anticipated – leaving Telkom in a much stronger position – competitors in the pay-TV space will have a tough time trying to beat the mighty DStv.
Sector analysts said previously that it would be difficult for new entrants to compete, given that MultiChoice has tied up premium content, such as sports broadcasting rights.
But Matthyser is confident that there’s more than enough content around for it to put together a compelling offering. He says Telkom Media is in the process of negotiating with international studios to bring new content to SA and is looking at interesting new channels in the East, North America and Europe.
On the sports front, he says it would tailor coverage to a wider SA audience. Which means more soccer – competing for PSL rights – and other local sports, although not discounting the importance of cricket and rugby. Matthyser says broadcasting rights came with specific events and there was nothing stopping new entrants from creating new sporting events.
It also intends investing in new SA series and launching a 24-hour African news channel, with former head of news at e.tv Jimi Matthews in charge of content.
Matthews says he’s excited about the possibilities offered by the new entrant. "Consumers are no longer satisfied by a linear experience. For example, they don’t want news at a scheduled time. They want it at a time that’s convenient, in a format that convenient and at a price that’s affordable."
Matthyser says the longer the licensing process dragged on, the less likely it was that new entrants would be able to compete: "You can’t put your business plan in the public domain, allow your competitor a year to copy it and then expect to catch up."
Icasa will hold public hearings on the applicants between 7 and 22 May.
Matthyser says Telkom Media would launch commercially within nine to 12 months of being awarded a licence.
However, from the trial it’s clear that the company is already some way down the road towards being ready for that launch. It also has the advantage of a big brother in the form of Telkom, although Matthyser went to great pains to stress that it would operate as a separate company.
Telkom Media has 34% outside shareholding, won’t assume the Telkom brand name commercially and will compete on an even footing with other value adding network service providers, buying its bandwidth at a wholesale rate from Telkom and negotiating interconnect agreements with it, he says.
YOU’RE WATCHING your favourite soapie and some of the characters are eating pizza. An order prompt appears at the right hand corner of your screen, so you press OK on your remote control and half an hour later a pizza is delivered to your doorstep.
Telkom Media says that is one possible e-commerce transaction that South African consumers should be able to carry out a few years from now after the advent of cable TV.
There’s no need to pay the deliveryman, as you’ll be billed as part of your monthly phone bill, which would also include your high-speed broadband connection, your cellphone calls and, of course, your cable charge.
While eating your pizza you could be watching a movie. However, you’d have other screens open below showing you different angles of your favourite golf pro on the 18th green. You could also send a message to a friend and pause the film because another pop-up informs you your son is calling on the IP phone from Britain, where he’s on business.
If you missed your favourite series but forgot to record it, there’s automatically a week’s worth of recorded material you can revert to at any time. And with video-on-demand who needs to climb into the car to hire a DVD?
Finweek
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